Weekly Recap (March 9 – 13, 2009): TaurusTrader’s prophecy to begin the week, ” …. expect some bounce up for the markets this week ……. planning on exploiting any ‘bounce ups’ as and when they happen …..”, did indeed come true. It was not pretty to begin with on Monday, but Gosh, things changed in a hurry … when the rally started, it did not waste any time …. it just took off. All major indices had substantial gains not seen in a while. It was the kind of rally, no matter what you call – a bear market rally, reversal rally, short cover rally, Obama rally, anti-Obama rally, Bank CEOs rally, Stewart-Cramer rally, etc etc etc, that the TaurusTrader was waiting patiently, totally planned with right picks, and pounced on for profits! Please refer to my blog posts through out the week for details. I hope you did well too.
For the week, Dow traded in 800 point range (6440 to 7243) to close at 7224 and gained an impressive 597 points or 9%. S&P gained 10.7% or 73 points to close at 756.6 (range 673 to 758), a close above November 21 low of 741. The tech heavy Nasdaq market gained 10.6% or 138 points for the week closing at 1432 (range 1266 to 1434).
Major worries about the stability and viability of major banks were somewhat abated by upbeat statements by CEO’s Vikram Pandit of City, Jamie Dimon of JPM, and Ken Lewes of BAC – all indicated that their banks are lending and making profits! Even though, the GE credit was downgraded by a notch to AA+, it did not hurt as the market was expecting even worse. So, GE gained, instead of losing ground! More importantly, the Obama administration has started talking ‘coherently’ and in unison about their plans for rescuing financial institutions and fixing economy. Congressional hearing about modifications in mark to market accounting practice to deal with toxic assets on balance sheet of financial institutions, and SEC’s inclination to bring back the ‘uptick’ rule for shorting stocks, also added fuel to the rally.
TaurusTrader’s swing portfolio had a fantastic week. Five positions hit their profit targets within a short holding period of 1 to 5 days.
- WFC bought on Marck 9, sold on March 10 for 29.2% gain
- BIGCC (BIG April 15 call), bought on March 6, sold on March 11 for 70% gain
- WDC, bought on March 10, sold on March 12 for 11.8% gain
- MS bought on March 10, sold on March 11 for 20.1% gain
- JOYG bought on March 10, and sold on March 11 for 8.3% gain
None of the positions stopped out this week.
Because of wide intra-day price swings, we had several reccurring profitable day trade opportunities throughout the week with our day trade picks – MON, AGU, IPI, SYT, BAC, WFC, MS, HP, HPQ, FAS and MELI. I had mentioned several of those trades in my daily posts.
Week Ahead, March 16 – 20: Please do not kid yourself. No matter what you hear from experts on CNBC, we are still in a historic bear market. Negativism still exists, and is likely to persist for a while about the health of our economy, viability of financial institutions, political squabbling, etc. Even in bear market, we get some burst of enthusiasm and positive uptrend periodically, like the one we got last week. It usually is very fast and very violent! Now you see it, you feel it, but the very next moment it is gone heading in the other direction … even faster!! So, as I said before, be patient and be prepared to exploit those kind of movements as and when they happen.
I expect the markets to swing widely based on ‘instant news’. There’s a lot of scheduled events that could move the markets in a blink. It would be interesting to see how the markets would react to the ‘weekend news events’ – Ben Bernanke’s appearance on 60 minutes, OPEC’s decision to hold the oil out put steady, meeting of G-20 finance ministers, and contradictory statements made by Obama’s honchos on the health of economy at their news media circus acts!
I liked Ben Bernanke on 60 minutes. Thought he was forthright and heading in the right direction. He was emphatic in asserting that the recession could end in 2009, and no big banks would fail under his watch. Of course, there were caveats – the ‘political will’, mostly the lack of it and how soon the finanacial system can be stabilized. In all, no harm done with this highly anticipated event!
Tim Geithnet did OK at the G-20 meeting …. No harm done here either!
OPEC’s decision to not to cut production came as a surprise that might affect energy stocks at the open on Monday. As I write this, the crude was down by over 4% in Asian session.
Financial stocks might continue with their momentum from last week. A few hours ago, the CEO of HSBC announced that his bank would not ask for British government bailout. Banking stocks in Asia were responding positively to this news, as well as to the news from G-20 meeting of coordinated efforts to stem world financial crisis.
Economic calendar is busy for the week including some important releases –
- Monday – Empire State Mfg Survey (consensus – 32.00); Industrial Production (consensus, -1.2% month to month); Bernanke speaks.
- Tuesday – Housing Starts (consensus 450 K); Producers Price Index (PPI); FOMC meeting begins
- Wednesday – Consumers Price Index (CPI); EIA petroleum stats; FOMC meeting announcement
- Thursday – Jobless claims (654K); Leading Indicators (-0.6%); Philly Fed Survey (-38.0)
- Friday – Fed Chairman Ben Bernanke speaks
For complete economic calendar for the week, please visit:
On the earnings front, 93 companies are scheduled to confess their quarterly earnings this week. For complete list, please visit:
Some anticipated confessions are –
- Monday – SINA, SBLK
- Tuesday – ADBE, CSIQ, GES
- Wednesday – CLC, DRI, NKE, ORCL
- Thursday – BKS, PLCE, CRAI, FDX, WGO
At the beginning of the week, TaurusTrader’s swing portfolio contained following positions:
- RY- filled on March 13 @ $27.70, Friday’s close @ 27.65. Unrealized gain -0.1%. Target 30.50. Stop $25.60.
- MBT – filled on March 13 @ $28.35, Friday’s close @ 28.40. Unrealized gain 0.1%. Target 33.10. Stop $24.30.
- FCN – filled on March 12 @ $47.80, Friday’s close $47.63. Unrealized gain -0.2%. Target $52.00. Stop $45.15
- MDR – filled on March 12 @ $13.40, Friday’s close $13.98. Unrealized gain 4.1%. Target $16.00. Stop raised to $12.90
- CPRT – filled on March 10 @ $27.60, Friday’s close $29.43. Unrealized gain of 6.7%. Target $30.30. Stop raised to $27.50
- WDCDV (WDC April 12.50 call) – filled on March 6 @ <$3.00, today’s close $4.90, gain 63%. Target $6.00. Stop raised to $4.00
- SOHU – filled on March 10 @ $46.17, Friday’s close $48.66. Unrealized gain 5.1%. Target $50.50. Stop raised to $46.00
- BMC – filled on February 24 @ $29.46, Friday’s close $29.74. Unrealized gain 1.0%. Target $32.00. Stop $27.49
I’ve raised the ‘stop loss’ for WDCDV, SOHU, CPRT, and MDU to protect profits and/or to reduce losses.
Picks for Monday, March 16: Based on the news events over the weekend discussed above, I will be watching financial and transportation sector stocks on Monday. I will also be watching the earnings release from SINA, and for possible price action to the report. The stocks for swing trading are –
- WFC – buy above $14.10. Target $16.20. Stop 11.30 (Risky and very volatile, adjust your stop to your risk tolerance)
- AMR – buy above $3.70. Target $4.85 (50%), and $6.20 (50%). Stop 2.80 (you could also consider DAL or CAL)
I’ll be looking at the following for day trade opportunities: FAS, BAC, MS, ITRI, MELI, ITRI and SINA (on earnings!). Their chart patterns and volatility look interesting!
If there are questions or comments, please do post …..
Have a great week and happy trading.